You probably heard about the GOP Tax Bill, but it is finally starting to kick in. I generally avoid talking politics, so I will not focus on the partisan connotations of this bill, but I will discuss how it might impact you. This bill is far from perfect, but tax reform was desperately needed to compete on the global stage.
I recently looked at my pay stub and noticed I am getting more of my money back! Yes, I have noticed an increase by $57.37 a month (I get paid once a month). That is an extra $688.44 a year that I will get to keep. If you make 10 or 12 dollars an hour, for example, you will probably get to keep an extra 8 or 10 dollars in your paycheck ever two weeks. I know that is not a lot of money, but it is something. We are still waiting to see how much my wife’s paycheck will be. Most should see an increase in their checks by February, so I would be watching closely.
Obviously, the more money you make the bigger return you will see. One of the arguments is that this tax bill favors the rich. My question is what does not favor the rich. The old saying “the rich get richer the poor get poorer.” I generally do not complain when I benefit from a particular policy. I am under no illusions about this tax bill. There will always be winners and losers when it comes to legislation.
Our tax rate last year was 25% and it looks like it will be 22% next year. I typically always have to pay in because of capital gains. Between the interest from our CD, dividend income and capital gains we made around $31,000 last year. I sold a lot of stock last year and we ended up paying over $6,000 to the government, so if I can get any type of relief I will welcome it. The Child Tax Credit is also going up a little, so I am happy about that since my family is growing. Once again, I will take any relief I can!
The tax bill also drastically cut the corporate rate from 35% to 21%. I personally believe that is good for business. We have heard several big corporations giving their employees bonuses or pay raises. One of the criticisms was these companies would use profits from the tax cut by offering stock buybacks and dividend increases. I actually see this as good for investors. I own a lot of stock, so stock buybacks and increase dividends are great for me. If you do not own stock, you are probably not going to benefit.
Another benefit is the individual mandate for the Affordable Care Act (Obamacare) is gone. You are no longer penalized for not having healthcare insurance. I am glad they eliminated this part of Affordable Care Act, but Congress needs to get their act together and fix this broken system. Neither party seems willing or capable of addressing this issue. What lawmakers have done with our healthcare system is truly a national shame. I can only hope that one day we can live in a society where people are treated with dignity. No one should have to go bankrupt because of medical issues.
In the end, the GOP Tax Bill is far from perfect, but if it puts a little more money in my pocket and helps businesses compete, I will take it. Obviously, there will be winners and losers with any major piece of legislation. I think we need Congress to address our healthcare system, immigration system and our crumbling infrastructure. Perhaps I am asking too much, but I will give credit in regards to this latest tax reform. I will always support measures to put more money into the pockets of middle-class citizens and even those at the top. I strive to be there one day. Fingers crossed!
What are your thoughts on the tax bill? Are you seeing any benefits?